Pound to Australian dollar driven by Tory Leadership contest
GBP/AUD rates have dipped slightly overnight, with the pound currently trading just above its low of the day of 1.8315. Whilst the pound continues to find support around this threshold, it has failed to make any significant inroads back towards 1.85 over the past month.
Those clients holding sterling will be hoping for a quick resolution to the current Conservative leadership contest, which was whittled down to just two following Michael Gove’s elimination.
Boris Johnson and Jeremy Hunt battle for top job
That has left front-runner Boris Johnson and Foreign Secretary Jeremy Hunt, who narrowly beat Gove by a mere 2 votes, to battle it ahead of July’s final vote. The final decision on who will take the hot spot in number 10 Downing Street, will be left to 160,000 Conservative members.
Whilst Boris Johnson is still the bookies favourite, he has seen his majority support shrink over the weekend following reports that police were called to his home, following a loud altercation with his girlfriend. Whilst the allegations have swayed opinion amongst the wider public, is yet to be seen whether the story will have the same impact on the Tory members, who will ultimately choose the next Prime Minister next month.
The pound has thus far withstood any major sell-offs following the reports, but as it adds yet another level of uncertainty to the political and economic standing of the UK, with the markets not having a clear picture yet of who will be the leading the country and the policies that will be put in place.
Australian economy stalling, impacting GBP/AUD exchange rates
Looking at the Australian economy and there is clear evidence that the current trade war between the US & China, is having a negative impact on Australia’s economic growth. China is by far Australia’s largest trade partner and as such, the Australian economy relies heavily on Chinese demand for its exports. With demand falling due to a slowdown in the Chinese economy, Australia’s economic growth has stagnated over the first two quarters of this year.
Whilst the current uncertainty surrounding Brexit is helping to offset some of these concerns for the time being, it is likely to handicap the AUD from any significant moves back towards, or under 1.80 against GBP.
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